In the 2000 election, Colorado
citizens ratified Amendment 23, which requires annual, automatic spending
increases for primary and secondary public education. That decision has
significance for Michigan, where a more costly spending mandate may be on the
November 2006 ballot. Amendment 23 became a budget-buster for Colorado, and
Michigan voters would be wise to heed its lessons when confronted by its pricey
cousin: the "K-16 Proposal."

Similarly, the K-16 Proposal in Michigan would cost more and accomplish less than its advocates are sharing with Michigan taxpayers.

When they voted to approve
Amendment 23, Colorado taxpayers were receiving refunds from annual state budget surpluses of nearly $1 billion. A study conducted by the
Colorado Legislature after Amendment 23 went into effect summarized the budget
environment of the day: "It was widely believed that the state’s surplus had
grown so large that an economic downturn would not eliminate it." Yet, even with estimates showing that the amendment’s spending could be paid for
with only a portion of taxpayers’ refund checks, more than 47 percent voted against it.

These "widely believed" calculations were revealed
as excessively optimistic when a recession began just as Amendment 23 was implemented. By 2005, state tax collections were running more than $200 million less than they had been in 2001, yet mandated public education spending had spiked more than $700 million. Numerous other popular state programs received
disproportionately large cuts due to this nearly billion-dollar discrepancy.
Last year, with the state coming out of its recession and budget experts again
projecting surpluses, advocates of the programs that had been cut successfully
worked to pass yet another spending mandate. Referendum C, as it is known, will
allow the state to keep all of the projected surpluses for the
next five years. What had begun as a partial reduction of taxpayer refunds has
resulted in a five-year elimination of the refund — at an estimated cost to
taxpayers of $4.25 billion. In both cases, nearly half of Colorado voters
opposed the spending mandates.

Similarly, the K-16 Proposal in
Michigan would cost more and
accomplish less than its advocates are sharing with Michigan taxpayers. The
proposal would require inflationary increases for public school districts,
universities and community colleges, with more than half of the spending likely
going toward the preservation of an antiquated public school employee pension
program, the costs of which are expected to skyrocket over the next decade.

Public school employee retirement
benefits are vastly superior to and more expensive than what is available to
most Michigan taxpayers. Michigan Public School Employees Retirement System
literature boasts that it is "one of the best public pensions around." In
addition to a pension, public school retirees also are covered by a healthcare
benefit until they are old enough for Medicare. Just one-third of all private
employees and only 3 percent of those working in firms with fewer than 200
employees receive a comparable benefit. This number is shrinking every day, as
governments and large employers like Delphi adjust to the fact that such
obligations are driving them to financial ruin.

Rapidly rising MPSERS costs are
threatening to devour nearly every additional dollar in state aid to school
districts. These benefits must be brought in line with what the vast majority of
other taxpayers receive, or the costs are projected to get far worse. Rather
than reform, the K-16 Proposal would require a massive
subsidy from the state to bail out the school districts, relieving them of all
projected MPSERS cost increases and hiding the problem in a larger general
budget. Half of the K-16 Proposal’s spending will be dedicated
to MPSERS as early as 2008, and potentially more than two-thirds will go toward
teachers’ pensions after a decade. The K-16 plan is a financial shell
game devised to conceal rather than correct a serious problem.

Amendment 23 and the K-16 proposal each require
increased spending regardless of the economic condition of the state. Michigan
voters would be wise to keep Colorado in mind for this reason. But Colorado
tells less than half of the gloomy K-16 story. If enacted, a majority of
taxpayer dollars spent on the K-16 Proposal will go toward propping up
an outdated and expensive pension benefit that few taxpayers will ever enjoy
themselves.

#####

Kenneth M. Braun
is a policy analyst specializing in fiscal and budgetary issues for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to
reprint in whole or in part is hereby granted, provided that the author and the
Center are properly cited.

ISSN: 1093-2240,
SKU: V2006-21

Summary

A Colorado amendment that mandated yearly automatic increases in education spending has proven costly to taxpayers, eaten into other state programs and fallen short of promises. As Michiganians consider a similar mandate, they should first consider Colorado’s quandary.